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Payor Contracting

Jan 09
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Curbing Healthcare Spending: What Health Plans Are Doing to Work Against Out-Of-Network Providers

Curbing Healthcare Spending: What Health Plans Are Doing to Work Against Out-Of-Network Providers

By ASC Development, ASC Management, Payor Contracting No Comments

As healthcare spending in the United States continues to rise at a seemingly unstoppable pace, healthcare entities are making attempts to curb healthcare spending. This has led to changes in the healthcare marketplace and delivery of care to consumers. For example, health insurers are attempting to rein-in spending by decreasing the use of out-of-network providers. Recently, when asked what health insurers are doing to make it more difficult for out-of-network providers to secure patients and collect payment, I responded with “A variety of things depending on what the health plan is trying to prevent.”

While health plans are using a variety of measures to thwart out-of-network activity, this blog will focus on three prevention techniques that have perhaps become more prevalent recently:

  1. Educating members on the costs of using an out-of-network provider,
  2. Imposing penalties on in-network providers for use and/or referral to out-of-network providers.
  3. Making it difficult for out-of-network providers to collect payment.

Educating Members on the Costs of Using an Out-of-Network Provider

Health plans offering their members out-of-network benefits/coverage are going to greater lengths to steer their members away from out-of-network providers and to in-network providers through education.

As a first line of defense, health plans are taking steps to re-direct members to in-network providers via posts on their website and/or calls from pre-authorization staff, where the member is being educated on the increased cost associated with care rendered by the out-of-network provider. Some health plans provide an online hypothetical cost comparison tool. The tool helps members better understand the cost differences among doctors, facilities, and laboratories that do not participate in their networks.

Some health plans inform their members the out-of-network provider has no limit on what they can charge for their services, and those provider’s fees will not be discounted because they do not participate in the health plan’s provider network. Additionally, insurers may inform their members when an out-of-network provider is used, that they will likely end up paying a higher deductible and co-insurance.

Finally, health plans are alerting their members if they use an out-of-network provider, only a portion of the out-of-network charges will get paid by insurance and, absent a state-specific law or regulation, the member will be responsible for paying the remainder of the charges.

Penalizing In-Network Providers for Use of Out-of-Network Providers

When an in-network provider such as a surgical facility or surgeon uses the services of another provider who is not contracted with and participating in the plan’s network, the in-network provider may now be putting itself at risk for repercussions from the health plan.

Contracts between health plans and providers may require contracted providers to restrict their use of or referral to other contracted providers within the network. When these contracts are breached, consequences may arise including being served a contract termination notice or experiencing financial penalties. These types of restrictions have recently been extended to anesthesiologists, radiologists, pathologists, and surgical assistants.

These out-of-network referral situations have garnered significant attention because they can create unexpected “surprise bills” and substantial financial burdens for patients. As a result, health plans have started terminating contracts with in-network surgeons that use out-of-network surgical assistants and/or out-of-network facilities.

Some health plans are requiring new facilities seeking in-network status to accept contract provisions that allow the health plans to impose financial penalties on the facility for the use of out-of-network anesthesia, radiology, lab, and pathology providers. Penalties have ranged from a small amount to over half of the negotiated surgical fees. In addition, health plans have begun pressing providers to hold harmless provisions that protect both the payer and member from the added costs of out-of-network providers, including limits or prohibitions on balance billing.

Not Making It Easy to Collect Payment

Rather than reimbursing the out-of-network provider for services rendered, some health plans issue payment directly to the patient. This may occur even if the out-of-network provider has had the patient sign an assignment of benefits form, whereby the patient requests his or her health plan issue payment directly to the provider. And once the payment they’ve been waiting for has been sent directly to the patient, it may become more difficult for the out-of-network provider to collect payment. If patients have cashed and already spent the insurance reimbursement check, it may be difficult for the out-of-network provider to secure remuneration.

The practice of sending the payment to the patient will continue to be a deterrent to out-of-network providers. While a handful of states have enacted legislation which requires insurers to honor the assignment of benefits, chasing patients for payment will likely remain a labor-intensive administrative burden associated with managing out-of-network claims well into the future.

Making an Informed Decision on Going Out-of-Network

For some providers, the out-of-network strategy may appear to be the best fit for their business. But, facilities and physicians who either currently accept patients on an out-of-network basis or are contemplating doing so should also be aware of the potential obstacles and limitations of this strategy. Obstacles for out-of-network providers include persuasive education for plan members on the financial consequences of securing care from an out-of-network provider, the possibility of having penalties imposed on in-network providers, and the risk of chasing patient payments. If surgery centers do not understand the impact this will have on their business in the long-run, the vitality and long-term success of the center could suffer. It is in each practice’s best interest to understand the pros and cons of being an out-of-network provider prior to making an informed decision for the organization.

Dan Connolly, VP, Payer Relations & Contracting

Jun 06
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Securing Payer Contracts for Your De Novo ASC – It’s About Time!

Securing Payer Contracts for Your De Novo ASC – It’s About Time!

By ASC Development, Payor Contracting No Comments

Does anything matter more to your de novo ASC’s long term operational success than reimbursement rates and volume? Yes! While both reimbursement and volume are important, buying yourself the time required to secure credentialing, carefully negotiate reimbursement rates, and execute contracts with your key commercial payers is integral to your new facility’s success. They say, “Time is money.” In this scenario, that translates into securing adequate capital to cover operating costs while you accomplish crucial contracting tasks on behalf of your ASC.

Assessing Your Needs

Consider the following when assessing the cash reserves, line of credit, and time your de novo ASC will need during the payer contracting ramp-up stage of your development project.

Payer Credentialing

Credentialing for the newly developed ASC will take time. Credentialing requirements vary by payer. Some payers may require your new facility to receive approval from Medicare of its enrollment application prior to accepting your ASC’s credentialing application. To complete Medicare’s enrollment application, your ASC must perform several “test” cases. The current requirement is 10 cases. These cases will involve coverage from insurers other than Medicare. It not only takes time to perform these cases, it also takes time to select them from your surgeons’ patient pool of cash pay, workers’ compensation, auto, or charity cases that are readily available for surgical care shortly after your ASC opens. Completing this portion of the process can take several days to several weeks.

Some payers may require your ASC to be certified by Medicare and/or accredited by one of the CMS-approved accreditation organizations prior to completing credentialing. Once your new ASC’s Medicare enrollment application is approved, your facility will be placed on Medicare’s unannounced survey calendar. This means a surveyor may show-up anytime in a 90-day window for the on-site certification survey. Then, once the certification survey is finished, it may take several more weeks for the parties to exchange and/or process documentation before Medicare issues your certification letter. The certification letter provides your ASC with its Medicare number and Provider Transaction Access Number (PTAN). This portion of the process can take several months and must be accounted for in your project timeline.

Finally, once your ASC meets all the credentialing documentation requirements mandated by payers, it may take several more weeks for their credentialing committees to review and approve your credentialing application. Even if all goes well with credentialing, contracts cannot be executed before reimbursement is negotiated and each payer loads each agreement into its claims processing system.

Reimbursement Negotiations

Negotiating reimbursement rates take time. It will take time to obtain optimal reimbursement – or rates that are close to what you need – because payers often attempt to pay new ASCs lower than existing ASCs. This may be because payers view new ASCs as low hanging fruit on the cost-savings tree. Payers see an opportunity to save money by proposing lower reimbursement which, unfortunately, is quickly accepted by some new cash hungry ASCs.

From a short-term perspective, it may appear to make sense for a new ASC to accept the proposed low rates to secure payer contracts which then allows them to quickly start seeing commercial patients. However, in the grand scheme of things, the ASC is not solving a problem – it’s just delaying a problem. Such a situation gives rise to artificially setting market rates which takes additional time and effort to resolve during subsequent renegotiations.

It takes time and effort to secure reasonable reimbursement. It may take your new ASC a few to several months to negotiate agreeable reimbursement and contract terms with all its major payers. While some negotiation efforts can begin before the facility opens, most payers will not take new ASCs seriously until they open their doors. Maybe that’s because, until your doors are open, an opportunity cost to the payer and its members does not exist.

Executing Contracts

Waiting for payers to load the contracts you negotiate takes time. It generally takes 30-45 days, depending on the payer and the time of year, but occasionally it can take well over two-months. Oftentimes, the only thing your ASC can do during this stage is hurry up and wait. Therefore, the time spent in this portion of the process must be accounted for as well.

Gathering Resources

Having access to adequate capital to meet your ASC’s operating costs for 6-12 months after you open may be necessary to buy the time you need to secure your payer contracts. This is an important consideration when selecting a lender and applying for a line of credit for your de novo ASC.

No one can say exactly how long it will take. However, you should be financially prepared to spend a significant amount of time in the payer contracting ramp-up period. There is no way to get around this often-lengthy time investment, but laying the proper reimbursement foundation is a key component of your de novo ASC’s long-term success.

Dan Connolly, VP of Payer Relations & Contracting

Feb 15
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Addressing Patient Requests for Charity Care or Financial Hardship at Your ASC

Addressing Patient Requests for Charity Care or Financial Hardship at Your ASC

By ASC Management, Payor Contracting, Revenue Cycle Management No Comments

As insurance plans continue to shift more of the financial burden of health care to patient, providers receive more requests for charity care or financial assistance. Health care services have become unaffordable for many, forcing some patients to avoid necessary treatment if they do not receive substantial financial discounts.

Does your ASC have a process in place to address the rise in patient co-pays and deductibles, and the growing need for charity care?

One option for dealing with patient payments is to waive co-pays or deductibles to avoid the process altogether. Such a tactic, however, could lead you straight into legal issues related to the False Claims Act, Anti-Kickback Statutes, and non-compliance with managed care agreements. Additionally, there are state specific laws addressing waiver of co-payments and deductibles. The best response is to develop sound financial hardship and charity care policies to help you legally and consistently navigate these waters.

What is the difference between charity care and financial hardship?

There are no formal definitions for charity care or financial hardship. Health care entities use a variety of terms including, but not limited to, uncompensated care, charity assistance, and bad debt. In Pinnacle III’s managed facilities, we have established distinct definitions to minimize confusion and enhance communication.

Charity care is free care. The patient simply has little to no means to pay for needed medical services. The benchmark for receiving charity care is typically set using family income between 100% and 400% of the Federal Poverty Level (FPL). A chart with percentages of the poverty guidelines listing yearly and monthly levels can be found online.[1] The U.S. Department of Health and Human Services releases U.S. Federal Poverty Guidelines which are updated every year using Census Bureau data. The current data can be found online.[2] If you choose to use this method, make sure you update your policy annually when the new guidelines are released.

Work with your Board of Directors to determine what poverty level you will use to grant a charity care service. You may want to consider a sliding scale as listed below; however, charity care is typically “free.”

An example of a sliding scale is:

Below 250% of FPL: 100% charity care
Between 251%-300% FPL: 75% discounted care
Between 301%-400% FPL: 60% discounted care

If you choose to implement a sliding scale, keep your procedure costs in mind. Set your lowest discounted rate at or slightly above Medicare reimbursement which should allow you to break even on the services being provided.

Some ASC’s establish a “Charity Care Day” for a set number of patients who have cleared the Center’s approval process. On this day the providers, staff, and even some vendors donate their time and/or resources for the charity care surgical cases. This practice demonstrates significant commitment to the Center’s community. Share with the local newspapers or launch a public relations effort to alert your community to your initiative to help those in need.

While charity care is “free,” financial hardship is a request for discounted care. Some of the other terms used to describe financial hardship are economic burden, economic hardship, financial burden, financial distress, and financial stress. Being under-insured, having no insurance, and increasing medical costs are situations that contribute to financial hardship. When reviewing a financial hardship request, it is essential to have patients substantiate their financial need. In some cases, patients with insurance who choose not to file their claim with the insurance company, may not be eligible for your financial hardship program. Ensure your board clearly defines your facility’s financial hardship parameters.

Creating a Policy

Both charity care and financial hardship requests should go through an application process. Assign a financial counselor, or someone in your facility who handles financial discussions with patients, to guide them through your process and move completed applications along for consideration and approval.

Consider the following when setting up your financial hardship and charity care policies:

  1. Create an application form for the current episode of care.
    1. Require a new application and proof of hardship for future care.
  2. Be precise about the documentation needed to support the request.
    1. Tax returns
    2. W-2s
    3. Bank statements
    4. Proof of unemployment
    5. Alimony, child support, etc.
    6. All sources of income
  3. Reject incomplete applications.
  4. Consider all financial resources available to the patient.
  5. Provide available options to patients upfront.
    1. Payment plans
    2. Low cost health care loans
  6. Establish timeline for review and approval.
  7. Determine notification process of approval or denial – letter or phone call?
  8. Maintain the confidentiality of the data received with the application. Ensure bank account details, social security numbers, etc. are redacted (or partially redacted) to prevent this information from falling into the wrong hands.
  9. Make the process known to your patients who apply and ensure staff consistently follow it.
    1. Educate your staff on policy guidelines, timeliness of the process, etc.
    2. Consistently apply the process to each individual patient to avoid claims of discrimination.

Once your policies are created, consult your attorney to ensure you have appropriately addressed any risks and you are following state laws.

Unforeseen circumstances arise at the worst times. Having sound policies to review financial hardship and charity care requests will help you compassionately work with your patients while protecting your ASC’s bottom line.

[1] US Department of Health & Human Services; Office of the Assistant Secretary for Planning and Evaluation, Resources, A chart with percentages (e.g. 125 percent) of the guidelines

[2] US Department of Health & Human Services; Office of the Assistant Secretary for Planning and Evaluation, Poverty Guidelines

Carol Ciluffo, VP of Revenue Cycle Management

Nov 13
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What’s Your ASC’s Leverage Point in Payer Negotiations?

What’s Your ASC’s Leverage Point in Payer Negotiations?

By Leadership, Payor Contracting No Comments

When it comes to payer negotiations, your ASC leverage point is the weight you bring to the game. What do you lean on to produce results? What card(s) do you play to change the game?

What we’re talking about here is simple physics – matter, motion, energy, and force. Or put more simply, influence. Influence equals change. And no influence equals no change. If what you’re leveraging weighs on you as much as it does your opponent, it’s not leverage. Think of a teeter-totter on a playground with two evenly weighted people on it. It doesn’t move much! You need force applied to one side to create influence and shift the situation.

Your ASC leverage point is achieving the most gain while exercising the least amount of loss. It is important to know what you can concede and what you must gain before your walk into any negotiation. Apply this to all parts of your ASC business operations, especially negotiation with payers.

Optimal leverage enables you to impact change that multiplies your efforts and preserves the utilization of your resources.

Let’s look at an ASC leverage point example.

Is achieving a slight increase in your ASC’s procedure reimbursement at the cost of surrendering payment for implants a leverage point? No, because it costs your ASC as much as it gains. Again, think of the teeter-totter example with two evenly weighted parties attempting to move it. You must work to concede less while still achieving positive results. If your ASC can gain a decent increase without giving up anything other than perhaps the time and energy necessary to make its case, then a true leverage point is exercised.

For a leverage point to work in your favor, it must be sensible, perceived as credible by the payer, and not merely a perceived threat. If perceived as a threat, it will not have the power to influence the other side to move closer to a negotiating position. In either case, an ASC leverage point has potential to bestow gains or impose losses on the other side. However, a genuine leverage point is not overstated or punitive; it’s consequential and practical. It’s the prime force you exert to get what you need and goes beyond strong negotiating skills. Negotiation skills cannot replace a genuine leverage point.

Consider another ASC leverage point example.

Say a payer bundles implant payment and is not offering adequate reimbursement to cover your ASC’s costs plus a reasonable profit. Does your ASC threaten to terminate its contract with the payer because the procedure pays poorly? (This is probably a threat some payers hear often but providers rarely follow-through on.) This tactic would likely amount to a lose-lose proposition for both parties.

An alternate option is to inform the payer your ASC can no longer accept these cases on their members and must divert the cases to a higher paid (facility perspective) and higher cost (payer perspective) center to make your case. The former is not a perceived leverage point unless your ASC truly intends to carry out the termination. But the latter is not only grounded, it will demonstrate to the payer how much they will lose by not administering a reasonable procedure reimbursement that covers your costs and nets a reasonable profit.

Let’s face it, your facility needs the payer to pay more, but the payer has little incentive to pay your facility more. Payers hold significant leverage. To make your case, your ASC must find and exercise its leverage point and change the equation.

A change in the equation can be a payer gaining more information and an increased understanding and willingness to adapt to your ASC’s thinking. Your ASC is offering a cost-containment solution to the payer. Rather than simply asking for greater reimbursement, your ASC must negotiate rates that allow you and your payers to stay in business in a competitive health care market.

Dan Connolly, VP of Payer Relations & Contracting

Sep 19
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2017 OAS CAHPS: Should Your ASC Implement CMS’ Survey in 2017?

2017 OAS CAHPS: Should Your ASC Implement CMS’ Survey in 2017?

By ASC Management, Payor Contracting No Comments

The Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Provider and Systems (OAS CAHPS) collects information about patients’ experiences of care in ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPDs). The survey gathers patient perceptions related to communication and care provided by surgery staff, expectations prior to surgery, and planning related to discharge and recovery. Enforced implementation of the survey has been delayed until 2018, with the specific date being released this November. Surgery centers across the country are deciding if they should implement the survey as planned, or wait until the Centers for Medicare and Medicaid Services (CMS) begins enforcing survey implementation.

To assist in decision making, it’s helpful to review information regarding the OAS CAHPS Survey.

Why is CMS developing this survey?

  1. The number of ASCs has increased considerably in recent years as has the surgical case volume at both ASCs and HOPDs.
  2. Medicare expenditures from outpatient surgical sites for ASCs and HOPDs also continues to rise.
  3. Implementation of OAS CAHPS will provide CMS with statistically valid data on the patient experience to inform quality improvement and comparative consumer information about outpatient surgery facilities.

The results of the OAS CAHPS will be used to:

  1. Provide CMS with information for monitoring and public reporting purposes,
  2. Provide a source of information enabling prospective patients to make informed decisions in outpatient surgery facility selection, and
  3. Aid facilities with their internal quality improvement efforts and external benchmarking comparatively with other facilities.

What modes are available to administer the OAS CAHPS?

  1. Mail only
  2. Telephone only
  3. Mixed mode (mail survey with telephone follow-up of non-respondents)
  4. An electronic mode of surveying is currently under review.

How often is the OAS CAHPS administered?

  1. Surveys are administered on an ongoing basis.
  2. An annual minimum of 300 surveys must be completed for each facility.
  3. Participating facilities will provide a monthly sample of patients who received at least one surgery or procedure during the sample month to their survey vendor.
  4. Vendors will initiate surveys within three weeks after the sample month closes.
  5. Once a survey has been initiated it must be completed within six weeks.

The OAS CAHPS may be administered in conjunction with other surveys but sampling methods need to be followed to ensure patients are not overburdened by multiple surveys.

  1. For each sample month, the survey vendor must select the OAS CAHPS sample prior to selecting the samples for any other ASC survey.
  2. The ASCs cannot select the sample for any other facility survey they may choose to implement.
  3. The vendor must select the sample because the sample selection for OAS CAHPS cannot be disclosed to the facility.

OAS CAHPS Survey Implementation

  1. National voluntary implementation began in January 2016 with required participation scheduled to begin January 2018. CMS has proposed delaying implementation of the mandated 2018 date. The decision will be released in Medicare’s final 2018 ASC payment rule this November.
  2. It is unlikely the delay will be permanent because CAHPS surveys are already mandated in hospitals, home health, hospice, and dialysis centers.
  3. ASCs that have voluntarily participated in OAS CAHPS have received valuable information about the quality of outpatient care provided at their facility.

There are pros and cons to implementing the survey now versus waiting until CMS mandates the survey next year. It is often better to prepare early. What should administrators consider in determining what is best for their center?

Reasons to delay the OAS CAHPS Survey until 2018:

  1. Financial and administrative burden of submitting the data.
  2. Decision on the electronic survey mode option.

Reasons to implement the OAS CAHPS Survey now:

  1. You will know where your surgery center stands before mandatory reporting begins.
  2. You will have an opportunity to address identified issues for improved survey results.
  3. You can learn and understand your patients’ perceptions and make changes to increase overall satisfaction.
  4. Post-discharge surveying allows for a better assessment of the entire surgery process.

Peak One Surgery Center located in Frisco, Colorado has chosen to move forward with implementation of the OAS CAHPS survey now. It was an easy decision for us because it will allow us to get ahead of the competition. We can build out processes with our vendor and adjust our internal reporting systems. There will also be time for staff, physicians, and administration to learn the program. When my fellow administrators ask, I advise them to begin work with a vendor on voluntary implementation of the OAS CAHPS survey to avoid being at a disadvantage when the survey becomes mandatory.

Michaela Halcomb, Director of Operations

Jul 11
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asc reimbursement

Playing the ASC Reimbursement Shell Game

By Payor Contracting No Comments

When a payer sends you a new ASC fee schedule or other changes to your surgery center’s reimbursement terms, and touts an overall increase, beware! The proposed changes could unfavorably impact your bottom line. For that reason, consider reimbursement revisions with a healthy dose of skepticism.

Surgery center reimbursement changes offered by payers remind me of a sleight of hand shell game. A shell game is a gambling pastime played at carnivals or street fairs. A pea (or similar object) is hidden under one of three nutshells. The shells are quickly shifted around and the spectator is asked to track the location of the pea. Typically, the spectator loses because it’s nearly impossible to follow the pea’s path. The trick itself became so well known, the term “shell game” is now used figuratively to describe measures taken to deceive.

Controlling health care costs has become the great shell game for payers. They establish new rates of payment through sleight of pen, moving reimbursement from one area to another. They may transfer it altogether, shifting the payment responsibility to the patient via higher deductibles, co-payments, and coinsurance. While we may not be able to end the shell game, we can establish a comprehensive method to deal with proposed reimbursement changes that minimizes our losses.

Reductions in reimbursement can come in various forms:

  • changes in the reimbursement by payment category,
  • reassignment of procedures to a different, lower paying category, 
  • assigning previously unassigned (aka unlisted) procedures reimbursed at a percent of billed charge to a payment category, or
  • changes to the payer’s multiple procedure payment logic.

When you receive a payer’s proposed fee schedule or reimbursement changes, the only way to identify what the true effect will be is to pay attention. Keep your eye on the pea! Compare the payer’s proposed reimbursement to your facility’s current reimbursement on all procedures performed for the payer’s members during the last twelve months. Measure the full impact of changes by adjusting your analysis to account for procedure utilization over the same period. An analysis combining both measures will help you “follow the money” to assess the severity and frequency of the changes. Gauging the overall financial impact of the proposed changes will help you determine if you want to accept them.

Changes in fee schedules can only be used to perpetrate deception when you don’t complete a comprehensive analysis. Combat sleight of pen by implementing a thorough process to accurately assess the potential impact of proposed changes. You, and the ASC industry at large, will be glad you did!

Dan Connolly – Vice President of Payer Relations & Contracting

Mar 22
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High Deductible Health Plan Members

When is a Self-Pay Arrangement a Good Prescription for High Deductible Health Plan Members?

By Payor Contracting No Comments

Recently I was asked what ASCs could do to assist patients who can’t afford to pay for a procedure that’s covered under their high deductible health plan (HDHP).  If you haven’t faced this question yet, brace yourself!  The findings of the Kaiser Foundation and Health Research and Education Trust’s 2016 Annual Survey suggest you will soon.

Kaiser’s survey indicates four out of five patients who arrive in your facility are likely covered by a high deductible plan.  It further reveals that deductibles on employer sponsored health insurance policies rose 12% in 2016.  This is four times faster than premiums increased.  The average deductible for single coverage is almost $1,500 with many plans exceeding that amount.  Since 150 million Americans have coverage through their employers, expect to see patients with high deductibles more often.[1]  

I negotiated a contract with a payor on behalf of a client and was pleased the end result was exceptional reimbursement for the ASC.  However, one of the facility’s surgeons was approached by a patient who had insurance with that payor.  To my surprise, the surgeon was not as impressed with the reimbursement as I was.  He was concerned the payor’s contract made the ASC cost-prohibitive for his HDHP patients.  Talk about unintended consequences!  

Since I contributed to creating the problem, I had a stake in finding ways to minimize the adverse effects for the ASC and its patients.  One way was to educate patients on their right to opt-out of insurance and create a self-pay arrangement.  If you are wondering if your ASC and its patients could benefit from a self-pay arrangement, consider the following:

  • What limitations does your ASC need to be aware of prior to pursuing this route?
  • When can your ASC recommend to a patient that it may make sense for them to opt-out and enter into a self-pay arrangement?

What limitations does your ASC need to be aware of?

Review your contracts to determine which ones call for direct billing.  Most, if not all, contracts with insurance companies require providers to directly bill the insurer for covered services provided to their members.  

Federal regulations now allow patients covered by health plans the right to opt-out (typically for privacy reasons).  As Wall Street Journal clarifies: “Cash prices are officially aimed at the uninsured, but people with coverage aren’t legally required to use it.”[2]  If they opt-out, they choose to pay a provider in full on or before the day of surgery and relinquish the privilege of the provider billing the insurance company on their behalf.  

Some precautionary measures your ASC should be aware of include:  

  • Does your contract have a “most favored nation (MFN)” clause?  A MFN clause essentially restricts your ASC from accepting lower payment for a service from anyone other than the payor that mandated the clause.  In other words, your discounted rate for self-pay patients cannot be lower than what the insurer with the MFN status pays your ASC.  Fortunately, MFN clauses are not common these days.  But if they’re overlooked, this condition could present a problem if you deeply discount ASC fees for self-pay patients.      
  • Your patients need to be informed they can’t avoid paying their deductible under their HDHP. If the patient opts to seek care under a self-pay arrangement, an insurance claim will not be filed.  This means the amount they remit under the self-pay arrangements is not credited to (applied against) their deductible.      
  • Once a patient opts out of insurance, they cannot expect the ASC to bill the insurance company at a later date. By that point, it is likely the claim would be outside of timely filing requirements and subject to denial.

The primary message is “do your homework.”  This starts with knowing the terms in each of your insurance contracts and, when necessary, seeking legal opinion about your options.  Further, find out if there are laws in your state that override federal regulation.  Typically, the most restrictive laws will dictate your self-pay pricing.

When can your ASC recommend a self-pay option?

It makes sense for a patient to elect self-pay when:

  • The patient expects to be responsible for paying the ASC the full amount due under their HDHP.
  • The patient’s deductible is high and their health is such they do not anticipate reaching their deductible during their plan year.
  • The amount the patient will pay under your ASC’s self-pay policy will be substantially less than they would owe if you submitted the claim under their HDHP. Remember to take into consideration the contracted rate (allowable), not merely the fee you bill to the payor.  
  • The patient is able to pay for services in full, via cash or cashier’s check, on or before the day of surgery.
  • The patient is willing to sign a form electing to opt-out of insurance and enter into a self-pay arrangement.
  • The patient, for privacy reasons, wishes to withhold releasing their medical records to their insurance carrier.

Ensure patients who opt-out, specifically sign an “election to opt-out of insurance” clause on your self-pay form.  

By acknowledging this clause, the patient is stating they understand:

  • They have chosen to opt-out of their insurance.
  • Your ASC will not be filing a claim with their insurance company.
  • If the patient were to file a claim on their own, there is no guarantee it will apply towards their deductible. This is because the patient chose not to use insurance.

At the time of scheduling, it can be difficult to predict all the procedures that will be performed when the surgery actually takes place.  For that reason, add a disclaimer to the election form alerting the patient to the possibility of an alternate procedure and/or additional procedures being performed. Ensure they accept responsibility for paying the difference between the quoted price and the actual price after the “time of service” discount is applied.

Also, it is important to clarify upfront that receiving the discounted self-pay price is contingent upon payment being made on or before the date of service via cash, money order, or cashier’s check.   If your ASC opts to accept payment from the self-pay patient via credit card, consider adding a 3% credit card processing fee to your cash price.  Doing so will incentivize self-pay patients to pay with cash, money order, or a cashier’s check.

Finally, your ASC should not send any claims to the carrier for the opt-out episode of care, nor provide a claim form to the patient for claim filing purposes. Instead, incorporate all charge and payment information into the opt-out self-pay election form.  This precautionary measure may deter opt-out self-pay patients from sending a claim to their insurance company.   

Dan Connolly – Vice President of Payor Relations and Contracting

[1] “The Kaiser Family Foundation and Health Research & Education Trust. “Employer Health Benefits,” 2016      

[2] “How to Cut Your Health-Care Bill – Pay Cash,” The Wall Street Journal, February 2017

 

Mar 10
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ASC Trends

New White Paper! Looking Ahead: 10 ASC Trends and Developments to Watch in 2017

By ASC Development, ASC Governance, ASC Management, Leadership, Payor Contracting, Revenue Cycle Management No Comments

We are excited to release our latest white paper – 10 ASC Trends and Developments to Watch in 2017.

We are still in the early months of 2017, but it is already shaping up to be an interesting year in health care — one that is likely to be a mix of uncertainties, challenges, and opportunities.

Fortunately for ASCs, they are well-positioned to thrive in the rapidly changing and evolving marketplace.  They may even be able to improve their position by planning for and effectively responding to trends and developments.

The 2017 trends and developments for ASCs identified by our leadership team include a forecast for strong industry growth, interest in adding new specialties, and continued migration of higher acuity cases to ASCs.

Changes in the relationship between ASCs and payors are impacting reimbursement especially in facilities who do not have strong revenue cycle management solutions.  Bundled payment programs and the growing number of self-insured employers continue to create marketing opportunities.

Unfortunately, the continued escalation of the financial responsibility borne by patients present revenue challenges.  And, a rise in cyberattacks has disrupted health care, bringing cybersecurity to the provider forefront.

Finally, educating patients, physicians, health systems, and payors on the value of ASCs remains a top priority. Raising this awareness is crucial to fuel the growth the ASC industry is primed to experience in 2017.

In summarizing what’s ahead in 2017 for ASCs, Trista Sandoval, our Director of Business Development & Physician Relations, said:

“One of our main strategies is to continue to focus on raising awareness of ASCs as a high-quality, low-cost option for care, and doing what we can to drive applicable outpatient cases to our ASCs. That may take the form of helping hospital systems build their own ASCs, educating patients through direct consumer marketing, or reaching out to physicians to build awareness of the ASC setting as a viable option for their procedures.”

Through such efforts, Pinnacle III’s leadership team believe ASCs will thrive in 2017.

To read the full report, download the white paper here: https://www.pinnacleiii.com/white-papers/ 

The Pinnacle III Marketing Team

Feb 16
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ASC Managed Care Plans

What Golf Can Teach Us About Dealing with ASC Managed Care Plans

By Payor Contracting No Comments

By now, those of us in the ASC industry have all encountered situations where some payors do not reimburse separately for implants. This payor approach to reimbursement for high ticket items can be difficult to navigate.  Recently, I realized scheduling these patients at our facilities lends itself to a golfing analogy.

How so?  First, these cases come with a handicap.  Second, handicaps allow golfers of varying abilities to indulge in fair play. Third, polishing your drivers improves your game.  The key takeaway – you must keep score to improve your game.

Calculating Handicap

In golf, a handicap essentially signifies the number of strokes above or below what a first-rate player would normally need to achieve the desired goal (standard) on a particular hole or golf course.  A skilled golfer will count their strokes to gauge their success against the standard.

When your facility is faced with a managed care provider that does not reimburse for implants separately, it also needs to assess its handicap. Identifying the standard reimbursement for the procedure is essential to determine your handicap.  Consider all variables – costs and reimbursement by case type, for example – to warrant the best chance of obtaining your desired compensation goal.

Handicaps are based on recent play and are subject to change over time.  Similarly, it makes sense for your ASC to routinely weigh the current costs of implant(s) against expected reimbursement. When sufficient surplus is not present to cover projected costs, notify the physician immediately.

Like calculating handicap, there are easy ways to go about calculating costs and projected reimbursement. The adage “you can’t manage what you don’t monitor” applies here.  Measuring each case’s costs against anticipated reimbursement is part of improving your handicap.

Fair Play

Handicaps allow golfers of varying abilities to compete against one another on somewhat equal terms. In essence, it levels the playing field.

Prioritize scrutinizing costs and reimbursement on cases with significant implant costs. These costs may not be covered in overall bundle reimbursement methodology which can negatively impact your ASCs revenue.  Educating your physicians about proper case selection when they choose to schedule at your facility is fair play.

You Must Polish Your Drivers

Avid golfers will tell you polishing your drivers should be a regular part of your maintenance routine.  Preparing your drivers protects your investment and increases the possibility of improving your game.

Along the same lines, if you prepare your surgery center’s drivers, your physician owners will understand the potential financial benefits and issues that occur with their implant-intensive cases.  Doing so creates a higher likelihood of protecting their investment. 

You Must Keep Score to Improve Your Game

Ultimately, you want to improve your game. To do that, you need to keep score.  In this sense, think of scoring as receiving the reimbursement necessary to cover the costs of, and provide for, a reasonable margin for a specific surgery.  Track surgeries that do not meet this standard. This data can assist you demonstrate to payors how certain cases do not meet your expected margin. You can improve your score through evidence-based negotiations.

Conclusion

In summary, scheduling patients associated with plans that do not reimburse for implants separately can be tricky. Ensure you are tracking case costs and reimbursement, routinely educating physician users, and adjusting for challenges. This is not only necessary to improve your game, it is essential for fair play.  

Dan Connolly – Vice President of Payor Relations and Contracting

Jan 31
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Payor Contracting Negotiators

Payor Contracting Negotiators Yield Tangible Results for ASCs

By Payor Contracting No Comments

Clients often ask me, “Why should we hire a third-party negotiator to handle our ASC’s reimbursement from commercial payors?”  My most straightforward answer is simply, “It takes money to make money.”

There are three reasons why spending money on hiring a payor contracting professional is worth your pretty penny. First, perception is everything.  Second, time is money.  Finally, knowledge is important, but objectivity is essential.

Perception is everything

Payors quickly pick up on whether a negotiator is an experienced ASC industry professional. Experience working with payors throughout the country on behalf of numerous entities builds rapport with payors.  That rapport goes a long way toward easing the tension that can easily occur between parties with competing interests.  Because of this, the negotiator, although working on behalf of the ASC, can serve as an independent third-party mediator, creating common ground between the facility and the payor where meaningful discussion can take place.  Hence, broad specialized experience and rapport can be invaluable to your ASC in securing the desired perception with the payor.

Time is money

We’ve all likely heard the adage “time is money.”  Unfortunately, both lack of experience and knowledge will increase the length of the negotiation.  The cost to your center – incurred by delays in receiving optimal reimbursement – can be high as can the irrevocable expense associated with an opportunity foregone.  If the payor doesn’t need to educate a novice or get them up-to-speed on reimbursement issues, this will translate into time savings and, potentially, actual money in your ASC’s pocket.  Also, a third-party negotiator wears a specialized hat.  On the other hand, an administrator needs to wear many hats when running a facility.  This means third-party negotiators are more readily accessible and available to communicate with payors to ensure negotiations are optimally progressing.  As a result, they decrease the amount of time needed to complete negotiations.

Knowledge is important, but objectivity is essential

Physician stakeholders and your ASC’s administrator have knowledge about your facility like none other.  They know the strengths of the center and how each one benefits payors and their members. However, they typically don’t know enough about reimbursement trends and payor acumen to objectively assemble and present reimbursement proposals to payors.  Your ASC’s team is essential to equipping the negotiator with what s/he needs to form an evidence based negotiation.* However, they’re not in the best position to determine reasonableness of a request for reimbursement – they lack objectivity.

When it comes down to it, ask yourself if you are well equipped to handle any of the situations above.  Obtaining professional managed care contracting expertise may be one of the best decisions you make for your ASC and your time.

*Discussing the value and components of evidence based negotiations is beyond the scope of this blog posting.  However, it will be the single subject of a future posting

Dan Connolly – Vice President of Payor Relations and Contracting